Economy Watch: Are Shoppers Snapping Shut Their Wallets and Pocketbooks?
- Jul 15, 2010
July 15, 2010
By Dees Stribling, Contributing Editor
The U.S. Department of Commerce reported on Wednesday that retail spending by U.S. consumers dropped 0.5 percent in June compared with May, which sounds like a large drop until automobiles, gasoline and building materials are removed from the equation. In that case, consumer spending actually rose 0.2 percent compared with May. Moreover, compared with June 2009, sales were up last month by 4.8 percent.
But even the auto, gas and building material sectors haven’t fared that badly in the first six months of 2010. Car sales increased 9.8 percent during 1H10 compared with 1H09 and gas sales saw a 23.2 percent gain over the same period. Building material sales, spurred by the tax credit, were up 3.8 percent during the first half of 2010.
Various other retail sectors did reasonably well during June 2010, including electronics and appliances, which saw a sales increase of 1.3 percent; department stores, which experienced a 1.1 percent increase; and online retailers, whose sales grew 1 percent compared with the previous month.
Marriott, Hotel Business, Show Signs of Life
Marriott International has posted 2Q10 net income of $119 million, a tripling compared with the same period in 2009. Moreover, revenue per available room (RevPAR), an important metric in the hospitality business, increased 7.5 percent in the United States for Marriott, and 9.8 percent in other countries. “Business and leisure stays at our hotels are trending up,” J.W. Marriott Jr., the company’s chairman and CEO, said in a statement.
The days of U.S. hotels, at least the full-service ones, cutting their room rates seem to be over if Marriott is the bellwether that it’s often taken to be. In North America, the chain’s room rates rose 1.7 percent during the quarter, the first upward bump since before the Panic of 2008.
As a whole, the hospitality industry seems to be making at least a modest recovery. PKF Hospitality Research estimates that U.S. hotel RevPAR will rise 1.7 percent during all of 2010. Smith Travel Research reported that lodging demand in the first quarter of 2010 increased 5.3 percent compared with the first quarter of 2009, which is the largest annual increase in demand for hotel rooms since the late 1980s.
Fed Scales Back U.S. Growth Prediction
The Federal Reserve said on Wednesday that the U.S. economy will likely grow 3 percent to 3.5 percent in 2010, a downward revision of its earlier estimate of 3.2 percent to 3.7 percent.
Among other factors, the Fed cited the slowdown of the housing industry, which is now hobbling along without its federal tax-credit crutches. According to the Mortgage Bankers Association on Wednesday, applications for residential mortgages dropped 3.1 percent during the month to their lowest level since the middle of the Clinton administration.
Wall Street had more of a bungee jump than a roller coaster ride on Wednesday, ending almost where things started. The Dow Jones Industrial Average gained 3.7 points, or 0.04 percent, while the Nasdaq was up 0.35 percent. The S&P 500 lost a minuscule 0.02 percent.